Life sciences report

4Q 2020 Raleigh-Durham North Carolina / The Triangle Overview

North Carolina is home to 775 life science companies, In the U.S., employment of life, physical and social and with steady long-term growth, the industry science occupations is projected to grow 5% between employs more than 67,000 North Carolinians. The 2019 and 2029, which will result in approximately sector continues to be a major economic driver for 68,200 occupational openings in the sector. Steady the state and Raleigh-Durham region. The solid growth in life sciences has acted as a buffer during relationship between educational and private the past two recessions, where in both instances the institutions have facilitated the recruitment and region’s private sector employment declined while retainment of talent across the area. North Carolina the life sciences industry grew. In the combined leads the country in vaccine manufacturing and now Triangle MSA, research and development employment has the world’s largest concentration of contract grew 4.4% year-over-year (3Q19-3Q20), the highest research organizations. North Carolina is one of just 10 employment growth percentage among all life science states with a “specialized” employment concentration industry sectors in the region.

Approximately 75% of North Notable NIH Funding by Organization (2020) Carolina’s life science companies are based in the Raleigh-Durham region. Integrated Laboratory Systems Rho Federal Systems Division Baebies, Inc. in three or more life science sub-sectors. The Raleigh- PPD, Inc. Durham region’s rich talent pool, strong economic Duke University fundamentals and proximity to universities have UNIVERSITY OF NORTH CAROLINA Family Health SYSTEM attracted major companies to the area. Research International DUKE UNIVERSITY Triangle Park is the largest research park in North RESEARCH TRIANGLE INSTITUTE America and is home to industry leaders such as Syngenta, Bayer, IQVIA and Biogen. As the world $2.2B Total FAMILY HEALTH INTERNATIONAL grapples with the COVID-19 pandemic—the biggest 2020 NIH PPD, INC. Research Triangle public health crisis in a century—biotech employment Institute Funding RHO FEDERAL SYSTEMS DIVISION is increasing and the Triangle region is experiencing heavy demand for biomanufacturing and lab space. INTEGRATED LABORATORY SYSTEMS

BAEBIES University of North Carolina System

Why the Triangle? Life Science Employment by MSA (3Q20) Low cost of doing business Raleigh1 Minimal regulatory hurdles

Some of the biggest names in biotech, Durham- agriculture and contract research Chapel Hill2

Access to talent from three R1 universities -1,000 4,000 9,000 14,000 19,000 24,000

1Wake, Johnston and Franklin Counties 2Durham, Orange, Chatham, Granville and Person Counties

AVISON YOUNG | LIFE SCIENCES REPORT 2 Facts and Figures

591 life science sites 31,000+ employees in the Triangle $10B contribution to Gross Regional Product 9.7M+ SF of life science inventory in the Triangle 4.8M+ SF of life science inventory in the pipeline $84B NC economic impact from life science industry

Biogen, a top-25 global pharmaceutical company, announced a $200M investment to build a 175,000-sf facility to support clinical production for its gene therapy pipeline. Biogen plans to add 90 more workers to its workforce of approximately 1,900 people at its two facilities in Research Triangle Park.

AVISON YOUNG | LIFE SCIENCES REPORT 3 R&D Grants

Twenty-nine technology companies across North Carolina have received grants totaling $1.5 million to foster job creation and promote research and University stats (fiscal year 2020) technological development in response to the COVID-19 pandemic. More than half of these The concentration of higher education in companies are in the life sciences sector. the region produces more than 5,100 STEM graduates each year.

#4 Highest concentration of PhDs Duke University $607 million in NIH Funding through 931 awards #4 for life science VC funding University of North Carolina at Chapel Hill #7 in new life science talent $511 million in NIH Funding through 984 awards

Sales and Operations Life science trends

• Increased demand for life science product is Contract creating interest in conversion of commercial Research and Testing office buildings to lab space. Some of the most promising conversion opportunities include traditional office buildings that are anchored by research universities with direct access to a steady pipeline of STEM graduates. Company type by % • Biotechnology is the most research-intensive industry in the U.S. economy, with spending accounting for 25.7% of total life science revenue. Production and Research and Manufacturing • U.S. life science investment sales volume Development reached nearly $4 billion in the fourth quarter of 2020 alone. As COVID-19 negatively impacted volume across all property sectors in early 2020, investors pivoted towards product recognized as being more resilient.

North Carolina’s life sciences manufacturing jobs rose 11% during the COVID-19 pandemic. The annual year-end analysis by the North Carolina Biotechnology Center’s Life Science Intelligence Team reported that 30,181 people were employed in production and manufacturing companies at year-end 2020, up 10.2% from the previous year.

AVISON YOUNG | LIFE SCIENCES REPORT 4 Notable tenant activity / last 12 months

PROPERTY TENANT ACTIVITY Parmer RTP Eli Lilly Purchased 110 acres for a pharma manufacturing facility. Parmer RTP Duke University In addition to 140,000 sf already occupied by the University at the campus, the 275,000 sf leased in 2Q20 will house the Duke Human Vaccine Institute. Patriot Park Taysha Gene Therapies Dallas-based Taysha Gene Therapies announced they have leased 187,500 sf at Patriot Park in the Research Triang Park submarket. Taysha plans a $75M capital investment for a 200-job manufactur- ing operation in Durham.

Notable sales / last 12 months

PROPERTY TOTAL SF BUYER SELLER PRICE ($M) *Parmer RTP, Parmer Ellis, Parmer 14 2,367,053 Alexandria RE Equities Karlin Real Estate $615 Keystone Technology Park 1,338,495 Longfellow RE Partners Bain Capital $405 Durham.ID 330,274 Longfellow RE Partners Bain Capital $138 *Perimeter's Edge Portfolio 398,988 Longfellow RE Partners Singerman Real Estate $65 *Center for Innovation & Technology 104,998 Ventas Keystone Corp. $53 Bradford & Berrington Center 224,779 Alidade Capital Crown Realty $41 Park Point 655,700 Trinity Capital Advisors Zurich Alternative $37 *Keystone Science Center 70,446 Ventas Keystone Corp. $27 The Labs at Research Triangle Park 69,059 Thor Equities Triangle Service Center $21

*Portfolio Sale

Notable R&D Space West Raleigh

PROPERTY YEAR BUILT TOTAL RBA (SF) % LEASED Alliance Center 2015 292,955 100% Biomedical Partnership Center 2017 44,835 100% Center for Technology & Innovation 2017 104,988 100% Keystone Centennial Science Center 2010 70446 100% Partners Bldg I 1996 81,352 96% Partners Building II 1999 59,131 100% Poulton Innovation Center 1991 68,896 100% Research Bldg IV 1996 75,571 100% Venture Center 1998 482,692 94%

AVISON YOUNG | LIFE SCIENCES REPORT 5 Research Triangle Park

PROPERTY YEAR BUILT TOTAL RBA (SF) % LEASED 110 TW Alexander Drive 2000 158,417 100% 15 TW Alexander Drive 1978 43,760 100% 2525 E NC Highway 54 1996 82,996 100% 400 at The Frontier 1980 56,337 95% 5 Triangle Drive 1981 32,120 100% 6040 George Watts Hill Dr 2015 61,547 100% 6-8 Davis Drive 1979 100,000 95% 9 Laboratory Drive Under Const. 160,000 0% Alexander Industrial Park 2018 99,960 100% Alexandria Center for AgTech 1984/2019 175,000 100% Alexandria Innovation Center 1994 135,677 99% Alexandria Technology Center - Alsto 1985 186,870 97% Bayer CropScience Innovation Center 2000 158,721 100% BioPoint 1998 148,989 100% Bradford/Berrington Center 1999 224,779 100% Discovery at Perimeter Park 1999 399,072 58% First Flight Venture Center 1991 52,622 100% INQ 2020 140,302 20% Keystone Technology Park 1997/2009 954,041 91% Lab Corp. I & II 1988 185,072 100% Newcastle North 1987 120,426 100% Park Point Under Const. 324,000 0% Parmer 14 1984 262,667 42% Parmer Ellis 1992 365,366 100% Parmer RTP 1989 1,681,710 79% Patriot Drive Sciences Center 1984/2001 50,884 100% Patriot Park 1989 375,000 100% Venture at Imperial Center 1988 138,337 100%

Downtown Durham

PROPERTY YEAR BUILT TOTAL RBA (SF) % LEASED Durham.ID 2018 330,274 77% Durham Carmichael Building 2013 114,600 100% The Chesterfield 2017 286,000 99% Venable Center 2006 74,438 100%

AVISON YOUNG | LIFE SCIENCES REPORT 6 15 18 17 85 5 Durham 7 Wake Forest

13 Chapel Hill 10 12 2 20 701 1 540 40170 8 14 4 70 9 3 6 40 440 64 Morrisville Knightdale 64 Cary Raleigh

40 Apex Pittsboro

70 Garner 1 70 19 Holly Springs 16 40170

Sanford 40 Clayton 11

MAP COMPANY TRIANGLE EMPLOYEES NC EMPLOYEES LARGEST CRO’S BY NUMBERS OF EMPLOYEES 1 IQVIA 5,143 5,353 2 RTI International 2,274 NA 3 PPD 2,000 3,500 4 Syneos Health 1,680 1,804 5 Duke Clinical Research 1,090 1,090 6 PRA Health Sciences 800 900 7 FHI 360 440 440 8 Rho 350 350 9 Charles River Laboratories 300 300 10 Paraxel 300 700 LARGEST LIFE SCIENCE EMPLOYERS 11 Pfizer 3,610 3,846 12 Grifols 2,183 2,632 13 GSK 1,900 2,000 14 BASF 1,769 2,000 15 bioMerieux, Inc. 1,200 1,200 16 Novo Nordisk 1,200 1,200 17 Merck 862 1,379 18 Novozymes 680 680 19 Seqirus 550 550 20 Syngenta 500 1,200

AVISON YOUNG | LIFE SCIENCES REPORT 7 Life Science Clusters

Research Triangle Park

Research Triangle Park is the largest research park in North America. Founded in 1959, the park’s 7,000 acres are home to over 75% of North Carolina’s life science companies. The nation’s first state-funded non-profits promoting life sciences and microelectronics—the North Carolina Biotechnology Center and the Microelectronics Center for North Carolina—were established in RTP. NC Biotech has become North Carolina’s go-to life science resource, supporting the region’s ideas, research and universities, and offering millions of dollars in North Carolina biotech grants and loans.

More than 560 life science companies are located in RTP, ranging from global corporations to start-ups. Major industries include pharmaceuticals, agtech, cleantech, advanced manufacturing and technology. RTP is a major hub for life science talent due in large part to the region’s academic institutions, which attract more than $3 billion in federal R&D funding each year.

In early 2021, Longfellow Real Estate Partners announced the acquisition of a 20-acre property adjacent to its existing Discovery at Perimeter Park campus with plans to develop a 480,000-sf lab development. Longfellow’s plans include four lab buildings, each comprising 120,000 sf. The new project will bring Longfellow’s North Carolina portfolio to nearly 3 million sf, doubling its footprint in the state.

Global biotech company, Biogen, will grow its presence in the Triangle with a $200-million investment in a new gene therapy manufacturing facility. Biogen chose the Triangle region for its diverse talent pool, citing the company’s 26-year track record of successfully recruiting top-tier employees in North Carolina. Downtown Durham

Downtown Durham continues to entice life science companies and offers tenants an innovative and collaborative urban environment.

Durham.ID, developed by Longfellow Real Estate Partners, has a large presence in Downtown Durham, providing lab, office, residential and retail space. The adaptive reuse development has 115,000 sf of existing lab space and 490,000 sf of office space. Once complete, the master plan will offer 1.7 msf, including 900,000 sf of new office and lab space. Major occupiers range from Duke University tenants such as Duke Clinical Research Institute and Duke Molecular Physiology Institute, to large private companies such as Nutanix and Measurement, Inc. The former WeWork space at 300 Morris Street will be converted to 100,000 sf of state-of-the-art lab space by summer 2021.

The Chesterfield building, a redeveloped former Liggett Myers manufacturing plant, serves as Wexford Science + Technology’s 286,000-sf office, lab and technology space. In partnership with Duke University, the project features a unique innovation cluster that includes Biolabs NC, a biotech coworking facility. The lab is equipped with top-of-the-line research equipment, attracting ambitious startup companies. Headquartered in Baltimore, Wexford partners exclusively with universities and medical research centers and other major research institutions to create these collaborative mixed-use communities.

Centennial Campus / West Raleigh

North Carolina State University’s Centennial Campus is a 5.1-msf research-driven park located in West Raleigh. Centennial Campus plays an important role in encouraging innovation and partnering with students, national and international partners and government entities. More than 170 start-up companies have been launched in Centennial Campus, and the park is home to more than 76 industry, government and nonprofit partners.

Biomedical Partnership Center offers 2,435 sf of lab and office space.

Keystone Science Center provides more than 78,000 sf of office and lab space and is a major hub for research and development.

The Center for Technology and Innovation has more than 110,000 sf of office, R&D lab and industrial space and is LEED certified.

AVISON YOUNG | LIFE SCIENCES REPORT 9 Recent Corporate Announcements

Gilead Sciences Taysha Gene Therapies California-based Gilead Sciences will open a business Texas-based Taysha Gene Therapies chose Durham service operation in Wake County, investing up to $5 over Dallas for a $75 million manufacturing million and adding 275 jobs with an average wage of operation. The move will create 201 high-paying new more than $142,000. The pharmaceutical company jobs with an average wage of $120,000. Taysha was chose the Triangle over Atlanta. Incentives are founded in partnership with the University of Texas estimated to be valued at more than $13 million and Southwestern Medical Group. will include job training grants.

Adverum BioAgilytix Adverum Biotechnologies is investing $80 million to Durham-based BioAgilytix chose Durham over construct a new 100,000-150,000-sf facility that will Massachusetts for a $61.5 million expansion that will be home to 200 new jobs. Adverum picked Durham add 878 new jobs. The company is eligible for up to over competing sites in California and Massachusetts $18.8 million in incentives. The average minimum and will offer employees average salaries in excess of wage will be $96,500. $90,000.

KBI Biopharma Nuvotronics Durham-based KBI Biopharma will build a new $150 Durham-based Nuvotronics chose Durham over million facility in Research Triangle Park. The site will Huntsville, Alabama for a 150-job, $50 million be home to 200 employees and is expected to open expansion of its high-tech manufacturing operations. Incentives are valued at $5 million. in early 2022.

AVISON YOUNG | LIFE SCIENCES REPORT 10 Office to Lab Conversion

Durham.ID

The former WeWork space at 300 Morris Street in Downtown Durham is in the process of being converted to 100,000 sf if state-of-the-art lab space. The coworking giant vacated its space amid the COVID-19 pandemic in 2020. The labs will range in size from 8,000-10,000 sf and larger and will address needs within the urban Durham market for high-quality lab space.

INQ

Originally built in 2009 as a Sam’s Club totaling 140,302 square feet, INQ@1101 will offer state-of-the-art new lab and creative office space. Mainstreet Capital Partners and a fund managed by DRA Advisors formed a joint venture to acquire and redevelop the property. INQ was recently rezoned for lab/life science and GMP facilities.

Perimeter’s Edge

Longfellow Real Estate Partners will convert this existing office and flex portfolio into lab and life science space. A $53-million loan secured in 3Q20 will finance the conversion. Longfellow paid $65 million for the five- building portfolio, which totals 399,072 sf of office and flex space. Future upgrades will include state-of-the-art lab space and façade enhancements.

AVISON YOUNG | LIFE SCIENCES REPORT 11 Occupier Solutions Meet our team

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North Carolina Team Brokerage Research

Kathy Gigac, SIOR Baxter Walker, III, SIOR, CCIM Emily Bostic Principal Principal Research Manager +1 919 913 1117 +1 919 913 1118 +1 919 866 4274 [email protected] [email protected] [email protected]

Thomas Kenna Ginny Hager Elizabeth Gates Principal Associate Principal | Senior Vice President +1 919 913 1119 +1 919 913 1115 +1 19 420 1563 [email protected] [email protected] [email protected]

© 2021 Avison Young North Carolina. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young. Sources: Avison Young Research, NIH, PwC Innovation Report, Research Triangle Foundation, NC Biotech, Techonomy, CoStar, Bureau of Labor Statistics. avisonyoung.com